Three of the most basic principles of economics are that people are price-sensitive, risk-averse, and that they respond to incentives.
If you raise the price of a good or service people will, in general, tend to buy less (price-sensitive). If you give a person a choice between a certain outcome (“I’ll pay you $50 for nothing”) or a higher payoff on an uncertain outcome (“I’ll pay you $100 or nothing based on a coin-flip”), they’ll generally take the less risky option (risk-averse). And if you give people a way to get a lower price without any risk, they’ll generally prefer that option (response to incentives).
Each of these principles seems intuitive, even obvious. Yet for some reason when you combine them to create a public policy people are shocked to find it can have “unintended consequences.
Take, for example, so-called “family-friendly policies” such as employer-mandated childcare, paid maternity leave, or requirements to allow full-time employees to work part-time work when they have a baby. Here is the opening of a recent New York Times article titled, “When Family-Friendly Policies Backfire.”
In Chile, a law requires employers to provide working mothers with child care. One result? Women are paid less.
In Spain, a policy to give parents of young children the right to work part-time has led to a decline in full-time, stable jobs available to all women — even those who are not mothers.
Elsewhere in Europe, generous maternity leaves have meant that women are much less likely than men to become managers or achieve other high-powered positions at work.
When you consider that employers are price-sensitive, risk-averse, and incentive-responding, none of this should be surprising. Women are the sex that bears children, so if you create policies that make it more risky and expensive to hire women, businesses will hire fewer women.
We may wish it were otherwise, of course. We may wish we lived in a world where it was possible to have family-friendly policies in which there would be no unintended consequences or adverse affects on mothers. But because we live in a world where resources (especially time and money) are scarce, we shouldn’t be surprised when businesses respond rationally to the incentives they are given.
The Times article attempts to find a solution, though.
Perhaps the most successful way to devise policies that help working families but avoid unintended consequences, people who study the issue say, is to make them gender neutral. In places like Sweden and Quebec, for instance, parental leave policies encourage both men and women to take time off for a new baby.
“It has to become something that humans do,” Ms. Glynn, from the Center for American Progress, said, “as opposed to something that women do.”
Can anyone spot the flaw in this reasoning? That’s right: Even in a “gender neutral” world only women can get pregnant.
If you made such policies gender neutral, women would still take advantage of them at a higher rate because they are the ones that must bear the children. Even if a culture divided the child-rearing duties more or less equally, an employer would still have an incentive to hire fewer women since they would, all other things being equal, be more likely to be affected by each additional child.
This is not to say that we shouldn’t encourage employers to adopt more family-friendly policies. Because the family is one the most important institutions in society, every other sphere (including business) should do what it can to aid and preserve the family. But it is foolish to try to mandate that which must be done voluntarily. Mandating such policies only causes women to suffer the consequences. As the Times article notes, “There is no simple way to prevent family-friendly policies from backfiring, researchers say.”
However, we should also not expect business to bear the burden alone. Other institutions—including churches and the extended family—should also voluntarily do more to help families that are in need of assistance (especially when it comes to childcare).
We all benefit from strong families and we all suffer when the family is weak. That is why we need more than “family-friendly” employment policies. We need to create a more family-friendly society.